Is it Profitable to Sell on Amazon in 2020?

By Patrick Banks

Posted 9 months agoOTHER

Being an Amazon seller can be a very profitable thing indeed in 2020. Selling on Amazon is now the sole stream of revenue for the vast majority of sellers on Amazon’s Marketplace.
Is it Profitable to Sell on Amazon in 2020?

This is largely due to the level of flexibility being an Amazon seller allows. Working from home, making additional money, choosing your own hours, and being your own boss certainly sounds appealing. You need good tools for earning money, so IO Scout discount will help you to save some money and become a profitable seller on Amazon.

Added to this is the fact that it’s relatively easy to jump on the Amazon bandwagon and start selling products. 

But just how much money can you stand to make as an Amazon seller? This article aims to answer this question, and many more about the intricacies of selling on Amazon. 

How much money on average do Amazon sellers make?

By and large, most Amazon sellers opt to go down the FBA route (Fulfilled by Amazon). 

Using FBA is a stress-free approach to handling all the administration and shipping required in your Amazon business. 

Enlisting FBA’s service means you don’t have to worry about customer orders, or customer returns, or customer complaints, or customer questions – anything to do with customers at all, really!

FBA ensure that your orders are fulfilled quickly, and delivered quickly too. All adding up to very happy customers. 

Amazon sellers – what are the typical earnings per year?

49% of Amazon vendors make under $100k, 36% of Amazon vendors make $100k-$1m, 13% make between $1m-$10m, and only 2% of Amazon vendors enjoy more than $10m!

And which products sell the best on Amazon?

  • Home and Kitchen – 18%
  • Toys and Games – 11%
  • Books – 9%
  • Health – 8%
  • Beauty – 8%
  • Electronics – 7%            
  • Clothing – 7%
  • Sports and Outdoors – 6%            

And which products earn the most profits on Amazon?

The most profitable items on Amazon can be categorised like so:

  1. Books
  2. Child and Baby Products
  3. Jewellery
  4. Active Wear, or Exercise Clothing
  5. Electronic Goods and Accessories 

Top Amazon Selling Categories in 2020

  • Toys and Games
  • Cameras and Photos
  • Electronics
  • Video Games
  • Cosmetics
  • Books
  • Kitchen Equipment
  • Health and Fitness

What about average profits for Amazon sellers?

Across the board, and speaking generally, the vast majority of Amazon sellers enjoy fairly elevated profit margins. 

  • Profit margins greater than 10% – (67% of Amazon sellers)
  • Profit margins greater than 20% – (36% of Amazon sellers) 

How long can you expect to wait before becoming profitable on Amazon?

Happily, the answer to this question is not too long.

67% of Amazon sellers report that they turned a profit within their first year as a seller. And the average new Amazon seller makes a profit of around $26k annually. 

How much does it cost to start as an Amazon Seller?

In order to gain complete perspective of your costs, you need to know how much it will cost you to get started in the first place.

There are some interesting statistics on sellers who commenced their Amazon selling career with $500, compared to those who began with more than $10,000.

Surprisingly, 33% of sellers that started with approx. $500 are still selling on Amazon’s Marketplace five years later (or more). This is compared to 13% of those who started at the upper end of the scale. It appears that in general, it takes longer to earn a substantial, and regular, profit selling on Amazon when you start out with a bigger cashflow. 

How much should you invest in initial Amazon inventory?

Recommendations come in at least 400 to 500 units of your product. This figure allows enough stock to launch your product well, start ranking on Amazon’s Marketplace, and potentially start offering giveaways and discounts to boost your initial product sales. 

And, as you can imagine, starting your Amazon business with a relatively low price point product enables you to invest in enough stock to get started, without a)breaking the bank, and b) not running out of stock.

How much time and effort does it take as an Amazon Seller?

Like any business, you need to put the work and effort in to see results. If, like the vast majority of Amazon sellers, you are seeing this as a new business venture as your sole income, then time will need to be spent on your new business. 

In the beginning, it’s likely a lot of time will be required as you research new products, check they’re viable, find suppliers, check product niches and categories, create listings, and so on. And then, after a while, it’ll settle and you’ll find your groove. The average amount of time spent on Amazon selling businesses is reportedly 11-20 hours a week. That’s not too bad!

Strategies to Successfully Sell on Amazon FBA

Research your intended products using a site like IO Scout to determine the likelihood of them selling, and selling well.

IO Scout Amazon Sales Estimator

Located within the Products area of IO Scout, you’ll come across a free tool within the IO Scout platform to aid your Amazon selling business.

The benefits of IO Scout Amazon Sales Estimator:

  • Calculation of Number of Sales
  • Product BSR

Sales estimates for each product can be examined either on IO Scout’s App, or in IO Scout Google Chrome Extension. Each product indicates a total tally of sales against it, so you can make an informed decision as to whether to sell this particular item on Amazon, and if it’s worth including it in your itinerary of Amazon products for your online business.

  1. Consider sales rankings of existing similar products on Amazon’s inventory. This can have an impact on your FBA storage fees, if your products are hanging around in Amazon Fulfilment Centre’s shelves!
  2. Bundle! Bundle products together that share similarities to reduce competition. 
  3. Get to grips with selling on Amazon by starting small to test the water, and not investing too much initially.

Key Takeaways to be profitable on Amazon

Selling on Amazon’s Marketplace is a time-consuming business. And you won’t always get it right every time, and choose the perfect product to sell every time. But that’s part of the process.

So, experiment – enjoy the process, and learn from errors. Soon you’ll pick up on trends in the Marketplace, and gain a really clear understanding of what your customers want – so you can give it to them!

Wishing you the very best of luck with your Amazon selling venture!

About the author Patrick Banks

Patrick is a Berlin-based dating advisor, motivational speaker, a huge fitness and vegan diet enthusiast and the main editor at Wingman Magazine, specialised in men's health. His ultimate goal is to share with men around the world his passion for self-development and to help them to become the greatest version of themselves. He believes a healthy body and successful social interactions are two main keys to happiness.